Mediterranean Blues

Octavian Report: What are the forces driving the tumultuous change that we have seen in Italian politics over the last few years?

Amb. Gulio Terzi: Let’s take the results of the Sicilian elections as a starting point. Nello Musumeci, the candidate of the center-Right, won. This is a significant test, at the national level, of the center-Right’s strength. There is no doubt that the consensus so evident at the time of the European elections three years ago around the agenda of then-Prime Minister Renzi has not only eroded but almost vanished. It was at the time around 40 percent. Now it is around half of that.

This erosion began with the constitutional referendum in 2016. Renzi believed himself to have an easy road to change the constitutional charter. By the way, the reform that he was proposing was, to say the least, a serious reform. It was very much criticized by experts; important members of the Supreme Court were pointing the severe flaws of this new project.

So, the first big setback for Prime Minister Renzi was this referendum: it lost, nearly 60 percent against 40, while he was convinced he had the upper hand. Now Sicily — eight or nine percent of the population — would have been a loss for him in any case. Whether the center-Right won or Five Star, it was never going to be a victory for Renzi. Though it is true that in Sicily Renzi’s Democratic Party has always had some problems.

This is the main trend: a big erosion for Renzi, for the Democratic Party. An erosion which does not match up exactly with the party’s legislative situation. While it is true that the Democratic Party has suffered with the creation of a left wing that split from the party with Bersani, D'Alema, and others, Renzi, in Congress, has always enjoyed almost 70 percent support. He is strong inside his own party and very weak on the general spectrum.

Renzi’s possible comeback, then — a possibility at the next general elections, upcoming in May — would rest on an alliance with former Prime Minister Berlusconi. And this goes for Berlusconi, too. The Sicilian test shows that he will not have after the next general election any alternative to striking an agreement with Renzi.

It's a very fluid situation. But it is evident that the forces which have been operating over the last two or three years in Italian society are coherent — at least in the sense that they are not supportive of the Democratic Party. Why is this happening?

I think it is due to a revolt in public opinion against the vast class of professional politicians. This applies to its older members as well as its younger ones, like Renzi. Remember, Renzi has been in politics for 25 years. He might be young chronologically but he is an old person politically.

This revolt among the general public in Italy — as in many other European countries — is not only because of immigration, because of economic difficulties. The main problem is that people want a much cleaner political system. Is it 25 years after Mani Pulite, after Clean Hands. We have not learned how to make the political system cleaner. Indeed, the situation has further deteriorated. Therein lie the roots of the success of the Five Star Movement.

The Five Star Movement is a movement that does not offer a positive vision. They have a program, they have interesting ideas, but it is a movement of protest. Its main protest is against corruption. It has a slogan — harsh, but it has some truth to it. They want, they say, the Mafia out of the state’s institutions.

I am, personally, a man of these institutions, so it is very painful to listen and to understand that there is truth in all this. The perception that the huge class of professional politicians has not understood yet the need to engage seriously in the fight against corruption and organized crime is widespread. We need to rid politics completely of people who are in a gray zone legally — or even in a black zone or a red zone, so to speak, which not only compromises with but has direct interaction with organized crime or corruption and interests that should not be part of a clean politics.

OR: Do you actually see a scenario where the Five Star Movement could come to power?

Terzi: It's very difficult to envision, especially with the present electoral law. As you know, it was passed precisely to find a common front against the Five Star Movement. Why? Because the Five Star Movement has a ceiling of the 30 or 35 percent, maximum, of the general electorate. Numbers like that pose a problem for the party. They want to avoid alliances, a common platform, because they believe they would be contaminated by other political forces should they ally themselves with the professional politicians. They want to remain by themselves. Having served in local governments in Rome and Turin (and elsewhere as well), they have suffered negative experiences over the last couple of years. They want to appear clean and honest — absolutely clean and honest. Like they're good managers, good public servants. But the experience they are having in local governments now has more than once been negative. Yet even having had this experience, they don't want to form an alliance with others. So the possibility for them to take power at the national level does not currently exist.

It did exist under the previous law, which favored not only coalitions, but also parties backed by pluralities instead of absolute majorities. For instance, if you have 30 percent of the vote and the second contestant had only 28 or 25, the previous law allowed the winner to obtain the absolute majority of seats in Parliament. That is undone by the present law. With present law, you effectively need to have a coalition which gives at least 50+1 percent to the winner to form a government. Thus, the Five Star Movement is a party which is condemned to outsider status.

Between March and May of this year it is constitutionally required that an election take place. It will be impossible for the Five Star Movement to gain a majority in that election and to come to government. That is the situation for them. The playing field is now covered in view of the creation of a new government next year — covered by the center-Right and the center-Left. And the center-Right has the upper hand.

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OR: What do you think of Paolo Gentiloni's leadership? What pressures have all the various forces you've outlined put on Italy's political relationship with the rest of the E.U.?

Terzi: Paolo Gentiloni has tried to move quietly — but with consistency — away from the direction of Renzi's leadership. At its beginning, of course, everybody saw it as the ultimate continuity government: it even had a nickname, “the Renziloni government.” It was seen by many as a stratagem by which the Democratic Party could run away from its loss in popularity after the referendum but still have the government run by the previous prime minister. And there was major continuity in the Cabinet: Maria Elena Boschi stayed on, as did Marianna Madia and others. It was practically the same government. That was the idea, at least. But since then a massive number of differences have appeared — the latest one being the fight over term renewal for Ignazio Visco, the governor of the Central Bank of Italy.

These differences have not only been led by the party’s need for a good cop/bad cop setup (where Renzi could be more vocal on certain subjects, especially the country’s relationship with the European Union). It also appears to be a question not only of style but of substance. That Gentiloni was looking for a bigger role for himself and seeking an option for continuity in a new government after the next elections. If he succeeds, Renzi perhaps will remain in position as Secretary General of the Democratic Party but in a way that has been sidelined by the government. That is the impression given by recent events, at least.

In fact, when you look at the substantive issues — especially the relationship with the European Union — Gentiloni is facing problems which Renzi also faced, and unfortunately remain largely unresolved.

The first problem is the aforementioned fight against corruption. Talking about fighting against corruption is inseparable in Italy from talking about the health the Italian banking system, which is a crucial point in our relationship with European institutions and the stability of the eurozone.

Renzi attacked the governor of the Bank of Italy, blaming him for the lack of oversight and inspection activity against seven or eight Italian banks which had been in trouble and still are, in a way, in trouble. Why? Because he wanted to blame Visco for a number of things which were also a clear responsibility of persons in his own government and to shift attention from the equally clear conflicts of interest there. Most prominent of these was the fact that Maria Elena Boschi’s father served on the board of one of these banks. There were denials in Parliament that any conflict of interest existed, but it was very evident there was a problem. Other banks saw problems where the political appointees nominally overseeing them were also on the governing bodies of those banks.

Certainly we can call these the results of corruption. So how is Gentiloni disconnected from that world? And what legitimacy does he have to be tough on these issues? For the time being, he seems likely to remain linked to that environment. This is an issue, all the more so when you're talking about the difficulties that a significant number of Italian banks are having because of non-performing loans. There are over 1 trillion euro of NPL across the European Union, and one-third belong to Italian banks. So people are asking "How is it that a couple of years ago we were listening to Prime Minister Renzi saying every day and publicly that the Italian banking system is the most secure and trustworthy and reliable in the world?"

This is a question which is central to our relationship with the euro group and European institutions more broadly, especially their financial stability mechanisms. At the last meeting in Luxembourg of eurozone financial ministers, there was quite a strong reaction from Pier Carlo Padoan, our Minister of the Economy, to proposed guidelines from the European Central Bank. These were intended to make it more costly for banks to hold bad loans in the hope that this will force lenders to write down their losses. The problem for us is that these guidelines, as they stand, may oblige our banks to post collateral against the entire unsecured part of their non-performing loans during the next few years — and so make problems for the entire bank system and lower our capacity for sustaining economic growth. Which, finally, has come to Italy. Some thanks for this is due to the Gentiloni government, but in general it is because the tide of the economy in the eurozone is higher than it was until a couple of years ago. We are not the front runner in terms of economic growth, but you can see not only from a statistical point of view but in general terms higher economic activity and a better mood among the business community.

OR: Do you see an Italian banking crisis blowing up into a wider euro crisis? Do you think the euro will survive over the next 10 years?

Terzi: The euro is the only way forward. I think this fact is entering the political understanding of even the most determined euroskeptics. Only the fringes of political life in some European countries are determined to leave the euro and the European Union. Yes, these parties may have had some successes in over the last year. But look at France. Look at the position of Marine Le Pen. She has suffered so heavily electorally because of her position on the euro and on the idea of having a referendum on the euro: really a tribute to the difficulty in proposing a viable alternative to the eurozone.

There is no alternative to the euro, as it is understood by the large majority of political parties and political forces in Europe today. The euro is here to stay. It is going to become always a more viable currency and assert itself as a global currency. There is going to be also a continuation of policy, perhaps a useful adaptation of the German agenda to reinforce the euro. Not as much through austerity measures, which has been the usual recipe of Wolfgang Schäuble and Angela Merkel and others countries more connected to Germany on this issue. But now there is a rather different idea coming via the election of Emmanuel Macron — to focus on a European budget, on a better coordination of our fiscal systems, and to reinforce the institutions of the Union to bring a more healthy distribution not of wealth but of economic resources. For instance, in Italy, one of the main problems is the need to review the finances managed by the public sector, which are huge. In Italy, this is a major problem: the problem of allocating financial resources to the public sector or finding other solutions through the private sector. But when you do that, you have to be sure to not let corruption creep in.

OR: How do you assess NATO’s strengths and weaknesses at the moment? What's your take on the Russia-NATO struggle?

Terzi: I believe that Russia has shown an extraordinary capacity. They're not only talking but doing. It is a case in history when you see that a power is anticipating and declaring strategies and lines of actions which it truly intends to do — and the other side doesn't believe it. It should surprise no-one. Putin attended the Bucharest NATO Summit in the spring of 2008, and it was clear that he didn't have any intentions of reactivating the NATO-Russia Council to show he saw NATO as a true partner. It was clear at that time — nine years ago — that his view of Western countries was very different from the view that Medvedev had, to say nothing of Yeltsin. Indeed, Putin has said that one of the biggest mistakes Russia made in recent years was considering Western countries as trustworthy.

So what was happening in 2008 and 2009? There a strategy review by the Russians, which made doubly clear that they did not see NATO and Western countries as partners but as adversaries and perhaps even as enemies. We didn't want to see that. It was too uncomfortable. We were talking — we Europeans especially — about Russia being part of the “dividend of peace” equation. Especially we Italians. In 2003, remember, there was an E.U.-Russia summit promoted by Berlusconi. We were able to cooperate in a number of fields, not only in anti-terrorism but also peacekeeping, as well as the working control of conventional forces in Europe. We were really counting on the continuation of this partnership, which was by 2008 not there any longer.

More recently there have been other evolutions, always in the direction of seeing the Western countries as adversaries. We saw four years ago the promulgation of the “General Gerasimov doctrine.” Valery Gerasimov, the current chief of the Russian Army’s General Staff, is on the record saying that now it is not necessary to have physical contact between military forces on the field. Thanks to new technologies, Russia can operate from inside its adversaries and can compromise and destabilize them. That was four or five years ago. We know what happened afterwards.

So what should NATO be doing in the face of this? NATO, up to now, has been the most successful alliance in history. It has created a completely new environment and new perspective for the free world without having to fight a war. But I think the need currently facing NATO is a compelling need to unite again, to emphasize more the common values that are the backbone of our alliance. I'm not dwelling too much on Article V commitments, but the common values of our societies. From that comes the conviction that we are in a very critical phase of history today. There is a retreat of liberal democracies. Freedom House said, in its latest report, that 2016 was the 11th year of retreat among liberal democracies along a number of parameters — freedom of speech, the rule of law, and the like.

If we want to promote democracy, we have to organize NATO’s structure, resources, and capabilities around that. I believe there was an important decision taken at the Warsaw Summit in 2016 on cyber capacities. There is no doubt that cyber is the third dimension of defense — again, General Gerasimov was right. But we need to not only listen but look at what we can do to be credible at the same level on cyber. It is very important that NATO update its capacities; it is equally important that each individual NATO member make structural and operational decisions that promote the exchange of intelligence and strategies towards a common definition of cyber defense. This is a main priority, in my opinion, for NATO.

OR: What is your take on the E.U.-Israel relationship and the ongoing efforts of the BDS movement?

Terzi: The BDS movement comes from extreme resentment in the Palestinian world — which is very unfortunate because it is counterproductive for the very world from which it comes. It is an instrument in the hands of very politicized Islamist radicalism — largely international. It's a tool of hatred. It should not be embraced by the scientific and economic worlds that have up to now embraced it. There was a famous phrase in Italy that liberals used against some Communist supporters: "useful idiots." I.e., people who believe they are fighting for a good and noble cause but instead they do exactly the opposite. I believe that BDS is something that should be countered, especially at universities. But at the end of the day we don't want to overemphasize it, because it is evident that it is an instrument in the hands of radicals.

I believe that the relationship between the European Union and Israel has been excellent and has produced a lot of good. I'm referring in particular to scientific cooperation, to the Horizon Agenda of 2020. Science and advanced technologies (and humanistic studies, too) progress much faster when Europeans and Israelis work together. We should always remember that the founder of the state of Israel, David Ben-Gurion, was reputed to have considered his nation as part of the European project. That was actually proposed by some members of the European Parliament. One such was Marco Pannella — he passed away in 2016. But during his life he was always an advocate of this idea of Israel as part of the European family.

OR: The press here often compares Donald Trump to Silvio Berlusconi — do you think that's a fair comparison?

Terzi: There are big differences between the two. I’ll mention just two or three. One is the fact that President Trump came to politics relatively late. Yes, he was always active in the political environment as a major entrepreneur. But Silvio Berlusconi has been directly involved in politics since the time of Bettino Craxi’s reign as prime minister. Berlusconi is liberal in the Italian sense of the term — think Benedetto Croce and Hayek. He is a believer in free markets and international trade, in individual freedoms. A very strong opponent of everything connected to Communist or any other Marxist politics. This is an ideological characteristic that he had even in his youth. I've heard him, in public speeches and in private, mention perhaps dozens of times that one of his formative experiences — which happened when he was still a teenager — was when his father brought him to visit an American cemetery in southern Italy. His father told him these were the men who lost their lives for the freedom they wanted to bring to us and to Europe. This was his rhetoric. But there is a truth in that. He was very close to Bettino Craxi, who was a socialist, but an anti-Communist. I'm talking about the early 1980’s and late 1970’s. Berlusconi has always been very much active in the political life of his country. I think this is the primary difference with President Trump, who showed a direct interest in running for the presidency but had not shown as much political inclination prior to that. It’s basically a different story.